Daily Real Estate News November 28, 2006
Sales of existing homes held steady with a modest gain last month, another indication the housing market is transitioning into a more normal market in contrast with unsustainable activity last year, according to the NATIONAL ASSOCIATION OF REALTORS®.
Total existing-home sales — including single-family, townhomes, condominiums and co-ops — rose 0.5 percent to a seasonally adjusted annual rate of 6.24 million units in October from an upwardly revised pace of 6.21 million in September, but were 11.5 percent below the 7.05 million-unit level in October 2005.
“The present level of home sales demonstrates some confidence in the market, but sales are lower than sustainable due to psychological factors,” says David Lereah, NAR’s chief economist. “The demographics of our growing population, historically low and declining mortgage interest rates, and healthy job creation mean the wherewithal is there to buy homes in most of the country, but many buyers remain on the sidelines. After a period of price adjustment, we’ll see more confidence in the market and a lift to home sales should be apparent in the first quarter of 2007.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional fixed-rate mortgage was 6.36 percent in October, down from 6.4 percent in September but up from 6.07 percent in October 2005. Last week, Freddie Mac reported the 30-year rate dropped to 6.18 percent — the lowest since January of this year.
NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, says sellers in most of the country are doing what it takes to attract buyers. “With the exception of parts of the West, sellers are cutting their price enough to encourage sales,” she says. “It’s an especially good market for sellers in areas with rising jobs and a growing population where prices remain moderate — those are the areas now with the strongest price growth. On the opposite extremes, about 10 percent of the country is experiencing economic weakness, and a fourth of the nation — areas that had the biggest boom — is in a correction that will take longer to balance.”
The national median existing-home price for all housing types was $221,000 in October, which is down 3.5 percent from October 2005 when the median price spiked above adjacent months to $229,000. “The annual decline in the October median home price is skewed because there was an uncharacteristic spike in October 2005, but the trend for the fourth quarter will be prices remaining slightly below a year ago. Overall prices are projected to see modest appreciation around early spring,” Lereah says.
National NumbersTotal housing inventory levels increased 1.9 percent at the end of October to 3.85 million existing homes available for sale, which represents a 7.4-month supply at the current sales pace.Single-family home sales rose 1.3 percent to a seasonally adjusted annual rate of 5.5 million in October from a level of 5.43 million September, but were 11 percent below the 6.18 million-unit pace in October 2005. The median existing single-family home price was $221,300 in October, down 3.4 percent from a year earlier.Existing condominium and cooperative housing sales fell 4.8 percent to a seasonally adjusted annual rate of 741,000 units in October from an upwardly revised 778,000 in September, and were down 14.5 percent from the 867,000-unit level in October 2005. The median existing condo price was $214,300 in October, which is 5.3 percent lower than the previous year.
Regional ReportsExisting-home sales in the West rose 6.4 percent to an annual pace of 1.33 million in October, but were 18.9 percent lower than a year earlier. The median price in the West was $340,000, down 0.6 percent from October 2005.
In the Midwest, existing-home sales were unchanged in October, holding at a level of 1.41 million, but were down 10.2 percent from a year ago. The median price in the Midwest was $170,000, a drop of 1.2 percent from October 2005.
Existing-home sales in the South slipped 1.2 percent to an annual sales rate of 2.49 million in October, down 8.8 percent from the same period a year ago. The median price in the South was $185,000, down 7 percent from a spike in October 2005.
Existing-home sales in the Northeast declined 2.9 percent to a level of 1.01 million in October, and were down 9.8 percent from October 2005. The median existing-home price in the Northeast was $254,000, a drop of 5.2 percent from a year earlier.
— NAR
© Copyright, 2006, by the NATIONAL ASSOCIATION OF REALTORS®
Wednesday, November 29, 2006
Generation X May BoostSagging Real-Estate Market
By Kristen Gerencher From MarketWatch
The housing market may be in a slump, but the industry's long-term trends look promising as younger generations begin to buy and trade up. That was the consensus among a group of consultants, analysts and developers speaking at the recent annual meeting of the Urban Land Institute in Denver.
Rising affordability concerns in some home and rental markets remain a challenge, but the generations coming up behind the baby boomers are giving home builders a run for their money, experts said. With more immigration and people living alone, demographic shifts are pressing developers to reconsider what's worked in the past.
Generation X, typically defined as those born between 1965 and 1979, comprise a little more than half of the market for newly constructed homes, said James Chung, president of Reach Advisors, a Boston-based marketing strategy and research firm.
But that doesn't mean the homes that lured baby boomers, born between 1946 and 1964, are meeting the needs of the 30-somethings shopping now.
"Generation X is in the heart of their entry-level home-buying years and are just now entering their peak trade-up years," Chung said. "They haven't yet stolen the thunder of the boomers when it comes to trade-up homes. It's a big shift coming up for home builders and developers."
Partly because many Gen-Xers are buying into the market after the run-up in housing prices began about a decade ago, they tend not to be as moved by deluxe kitchens, huge square footage and "prestige addresses" as their older counterparts are, he said.
"It's the trade-off generation. It's no longer sort of the live-large mindset," Chung said. "They're living under different economic realities than their predecessors. They carry 70% more debt than the baby boomers did at that point in their lives because of the cost of housing.... Almost all of that is housing debt."
Many are forgoing master suites and separate wings for kids and adults and instead seeking smaller footprints with space designed for family usage rather than individual usage, Chung said.
The market has yet to catch up with their particular demands, he said. "What we're seeing is a fundamental mismatch between what these buyers are wanting and what the market is offering. They're settling for what's available vs. finding what they really want."
As for Generation Y, also know as the echo boomers who were born after 1980, it's premature to draw conclusions, Gadi Kaufmann, chief executive of Robert Charles Lesser and Co., a real estate advisory firm, said during a ULI panel discussion on what young consumers want.
"Gen Y is going to be in student housing and rentals for the next six years," he said. See how student housing has changed today.
More solo dwellers
Also affecting home builders and developers is the rise of nontraditional households, Kaufmann said.
The portion of people living without a spouse or roommate ballooned 23% since 1980, he said. Only 22% of households were made up of a single person living alone 26 years ago compared with 27% in 2005.
A 57% rise in single-parent households and a 26% decline in the percentage of married couples with kids -- 23% last year compared with 31% in 1980 -- has further changed the housing landscape, Kaufmann said.
There's also more migration from expensive cities to less costly areas, as well as people moving away from their hometowns, he said.
Southern states and those bordering pricey ones, such as Arizona and Nevada, are the beneficiaries of home buyers who can't afford or become disenchanted with higher-priced areas such as California and the Northeast, he said.
So-called second- and third-tier cities with populations of 300,000 to 1 million are attractive to the youth market and poised for growth, Kaufmann told the audience. "Some of the most exciting towns in America are those second-tier cities."
Young people also tend not to mind close living, he said. As more people live alone and wait longer to marry and start families, many in their 20s and 30s are drawn to compact apartment and condo units in urban areas where they can interact with their neighbors.
The growth of the Hispanic population also portends shifts, though what kind remains unclear, Chung said. Latinos currently have a homeownership rate in the high 40% range compared with about 72% for whites. "If they move up in homeownership at a faster rate, that's going to be very positive for the home market."
Love affair continues
Whether the housing market has hit a bottom or not remains controversial.
Last week, the U.S. Commerce Department reported that the nation's economy grew at a preliminary annual rate of 1.6% from July through September, its slowest pace since early 2003 due to cooling in the housing market.
In a survey done in October by Reach Advisors, 41% of 500 consumers looking to buy a house in the last 12 months or planning to look in the next year said their plans to move were affected by market conditions, compared with 27% of consumers who said so in July 2005, Chung told ULI attendees at a panel discussion on the risks and benefits of homeownership.
The portion anticipating a drop in home prices was 32% last month compared with 13% in July of last year, meaning that two-thirds still don't expect price drops, he said. What's more, 93% said owning a home remains a strong or acceptable long-term investment.
Though the housing market may be in the doldrums, Chung said he's confident Americans' love affair with homeownership will endure even after this recent extreme swing in demand. "From 2003 to 2005 it wasn't just a love affair with your primary home. It was a torrid affair with real estate. It was your home plus your home on the side."
Still, a balance of owners and renters is desirable because homeownership isn't for everyone, Ron Terwilliger, chief executive of Trammell Crow Residential, a builder and manager of multifamily housing based in Atlanta, said during the same ULI panel discussion.
"You're better off renting unless you're going to be in a home for at least five years because of the costs of getting in and out," he told attendees.
"The reason this cycle went up so high and flattened so quickly is more speculative buying than I've seen in my 35 years in the business," Terwilliger said. "It's unfortunate so many people bought intending to flip."
It will take time to regain equilibrium, he said. "There's a lot of pain going on in the investment community."
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved
-- November 07, 2006
The housing market may be in a slump, but the industry's long-term trends look promising as younger generations begin to buy and trade up. That was the consensus among a group of consultants, analysts and developers speaking at the recent annual meeting of the Urban Land Institute in Denver.
Rising affordability concerns in some home and rental markets remain a challenge, but the generations coming up behind the baby boomers are giving home builders a run for their money, experts said. With more immigration and people living alone, demographic shifts are pressing developers to reconsider what's worked in the past.
Generation X, typically defined as those born between 1965 and 1979, comprise a little more than half of the market for newly constructed homes, said James Chung, president of Reach Advisors, a Boston-based marketing strategy and research firm.
But that doesn't mean the homes that lured baby boomers, born between 1946 and 1964, are meeting the needs of the 30-somethings shopping now.
"Generation X is in the heart of their entry-level home-buying years and are just now entering their peak trade-up years," Chung said. "They haven't yet stolen the thunder of the boomers when it comes to trade-up homes. It's a big shift coming up for home builders and developers."
Partly because many Gen-Xers are buying into the market after the run-up in housing prices began about a decade ago, they tend not to be as moved by deluxe kitchens, huge square footage and "prestige addresses" as their older counterparts are, he said.
"It's the trade-off generation. It's no longer sort of the live-large mindset," Chung said. "They're living under different economic realities than their predecessors. They carry 70% more debt than the baby boomers did at that point in their lives because of the cost of housing.... Almost all of that is housing debt."
Many are forgoing master suites and separate wings for kids and adults and instead seeking smaller footprints with space designed for family usage rather than individual usage, Chung said.
The market has yet to catch up with their particular demands, he said. "What we're seeing is a fundamental mismatch between what these buyers are wanting and what the market is offering. They're settling for what's available vs. finding what they really want."
As for Generation Y, also know as the echo boomers who were born after 1980, it's premature to draw conclusions, Gadi Kaufmann, chief executive of Robert Charles Lesser and Co., a real estate advisory firm, said during a ULI panel discussion on what young consumers want.
"Gen Y is going to be in student housing and rentals for the next six years," he said. See how student housing has changed today.
More solo dwellers
Also affecting home builders and developers is the rise of nontraditional households, Kaufmann said.
The portion of people living without a spouse or roommate ballooned 23% since 1980, he said. Only 22% of households were made up of a single person living alone 26 years ago compared with 27% in 2005.
A 57% rise in single-parent households and a 26% decline in the percentage of married couples with kids -- 23% last year compared with 31% in 1980 -- has further changed the housing landscape, Kaufmann said.
There's also more migration from expensive cities to less costly areas, as well as people moving away from their hometowns, he said.
Southern states and those bordering pricey ones, such as Arizona and Nevada, are the beneficiaries of home buyers who can't afford or become disenchanted with higher-priced areas such as California and the Northeast, he said.
So-called second- and third-tier cities with populations of 300,000 to 1 million are attractive to the youth market and poised for growth, Kaufmann told the audience. "Some of the most exciting towns in America are those second-tier cities."
Young people also tend not to mind close living, he said. As more people live alone and wait longer to marry and start families, many in their 20s and 30s are drawn to compact apartment and condo units in urban areas where they can interact with their neighbors.
The growth of the Hispanic population also portends shifts, though what kind remains unclear, Chung said. Latinos currently have a homeownership rate in the high 40% range compared with about 72% for whites. "If they move up in homeownership at a faster rate, that's going to be very positive for the home market."
Love affair continues
Whether the housing market has hit a bottom or not remains controversial.
Last week, the U.S. Commerce Department reported that the nation's economy grew at a preliminary annual rate of 1.6% from July through September, its slowest pace since early 2003 due to cooling in the housing market.
In a survey done in October by Reach Advisors, 41% of 500 consumers looking to buy a house in the last 12 months or planning to look in the next year said their plans to move were affected by market conditions, compared with 27% of consumers who said so in July 2005, Chung told ULI attendees at a panel discussion on the risks and benefits of homeownership.
The portion anticipating a drop in home prices was 32% last month compared with 13% in July of last year, meaning that two-thirds still don't expect price drops, he said. What's more, 93% said owning a home remains a strong or acceptable long-term investment.
Though the housing market may be in the doldrums, Chung said he's confident Americans' love affair with homeownership will endure even after this recent extreme swing in demand. "From 2003 to 2005 it wasn't just a love affair with your primary home. It was a torrid affair with real estate. It was your home plus your home on the side."
Still, a balance of owners and renters is desirable because homeownership isn't for everyone, Ron Terwilliger, chief executive of Trammell Crow Residential, a builder and manager of multifamily housing based in Atlanta, said during the same ULI panel discussion.
"You're better off renting unless you're going to be in a home for at least five years because of the costs of getting in and out," he told attendees.
"The reason this cycle went up so high and flattened so quickly is more speculative buying than I've seen in my 35 years in the business," Terwilliger said. "It's unfortunate so many people bought intending to flip."
It will take time to regain equilibrium, he said. "There's a lot of pain going on in the investment community."
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved
-- November 07, 2006
Tuesday, November 7, 2006
NAR Bullish on Housing Market, Advises Consumers to Take Action Now While Conditions Remain Favorable
WASHINGTON, November 03, 2006 -
In a full-page newspaper advertisement running in six of the nation’s leading newspapers beginning today, the leadership of the National Association of Realtors® is launching a national campaign to urge home buyers who have been waiting to buy the home of their dreams to act now before the market changes.
NAR’s first-ever newspaper blitz features the headline, “It’s a great time to buy or sell a home.” 650k PDF" href="http://www.realtor.org/files/home_buyers___sellers/good_time_to_buy_ad.pdf">The advertisement (650k PDF) points out that interest rates have fallen seven months in a row and are near 40 year lows, inventories of existing homes are higher than they have been in decades and prices have stabilized. But the perfect conditions for buyers are likely to change as sales pick up, prices gain traction and conditions improve for sellers next year.
“Homeownership is a safe, secure way to build long term wealth. The national median price of homes bought 10 years ago has increased 88 percent. The number of U.S. households is expected to increase 15 percent during the next decade, creating a continued high demand for housing,” the ad reads.
It quotes former Federal Reserve Chairman Alan Greenspan saying, “Most of the negatives in housing are probably behind us. The fourth quarter should be reasonably good, certainly better than the third quarter.”
The advertisement appears today in the Wall Street Journal and USA Today, and will run Sunday in the New York Times, Washington Post, Los Angeles Times and Chicago Tribune. It will run in the same newspapers again on the weekend of November 12.
NAR President Thomas M. Stevens of Vienna, Va., said the newspaper ads are the beginning of an NAR campaign to urge buyers and sellers to take advantage of the favorable market conditions. Two new network television and radio ads directed at buyers and sellers will begin airing in second week of January. The new spots will be rotated into NAR’s $40 million network Public Awareness Campaign.
NAR’s 1.3 million members and state and local Realtor® associations are being encouraged to adopt the message in their own advertising and communications to consumers, Stevens said.
“The market is much better than you might hear or read. Consumers should take advantage of this perfect alignment of low rates and extraordinary inventory before market conditions change,” Stevens said.
Total housing inventory levels fell 2.4 percent at the end of September to 3.75 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace, according to NAR’s existing-home sales report. The national median existing-home price for all housing types was $220,000 in September, which is 2.2 percent below September 2005, when the median was $225,000. The median is a typical market price where half of the homes sold for more and half sold for less.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.40 percent in September, down from 6.52 percent in August.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
© Copyright NATIONAL ASSOCIATION of REALTORS® I Headquarters: 430 North Michigan Avenue, Chicago, IL 60611 DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020 I 1-800-874-6500
In a full-page newspaper advertisement running in six of the nation’s leading newspapers beginning today, the leadership of the National Association of Realtors® is launching a national campaign to urge home buyers who have been waiting to buy the home of their dreams to act now before the market changes.
NAR’s first-ever newspaper blitz features the headline, “It’s a great time to buy or sell a home.” 650k PDF" href="http://www.realtor.org/files/home_buyers___sellers/good_time_to_buy_ad.pdf">The advertisement (650k PDF) points out that interest rates have fallen seven months in a row and are near 40 year lows, inventories of existing homes are higher than they have been in decades and prices have stabilized. But the perfect conditions for buyers are likely to change as sales pick up, prices gain traction and conditions improve for sellers next year.
“Homeownership is a safe, secure way to build long term wealth. The national median price of homes bought 10 years ago has increased 88 percent. The number of U.S. households is expected to increase 15 percent during the next decade, creating a continued high demand for housing,” the ad reads.
It quotes former Federal Reserve Chairman Alan Greenspan saying, “Most of the negatives in housing are probably behind us. The fourth quarter should be reasonably good, certainly better than the third quarter.”
The advertisement appears today in the Wall Street Journal and USA Today, and will run Sunday in the New York Times, Washington Post, Los Angeles Times and Chicago Tribune. It will run in the same newspapers again on the weekend of November 12.
NAR President Thomas M. Stevens of Vienna, Va., said the newspaper ads are the beginning of an NAR campaign to urge buyers and sellers to take advantage of the favorable market conditions. Two new network television and radio ads directed at buyers and sellers will begin airing in second week of January. The new spots will be rotated into NAR’s $40 million network Public Awareness Campaign.
NAR’s 1.3 million members and state and local Realtor® associations are being encouraged to adopt the message in their own advertising and communications to consumers, Stevens said.
“The market is much better than you might hear or read. Consumers should take advantage of this perfect alignment of low rates and extraordinary inventory before market conditions change,” Stevens said.
Total housing inventory levels fell 2.4 percent at the end of September to 3.75 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace, according to NAR’s existing-home sales report. The national median existing-home price for all housing types was $220,000 in September, which is 2.2 percent below September 2005, when the median was $225,000. The median is a typical market price where half of the homes sold for more and half sold for less.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.40 percent in September, down from 6.52 percent in August.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
© Copyright NATIONAL ASSOCIATION of REALTORS® I Headquarters: 430 North Michigan Avenue, Chicago, IL 60611 DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020 I 1-800-874-6500
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